Asset Drain Drops Putnam to Sixth Place

December 24, 2003 (PLANSPONSOR.com) - Putnam
Investments, the Boston mutual fund company that has been
hard hit by the ongoing trading scandal, continues to bleed
assets, according to one industry estimate.

Financial Research Corp (FRC), which estimates mutual
fund asset flows monthly, reported in its latest data that
Putnam suffered $13 billion in November outflows (following
$2.28 billion in October asset losses), lowering its latest
total to $131.4 billion. That was enough to drop the
beleaguered company down one notch in the FRC’s ranking of
the nation’s 25 largest fund groups from fifth to sixth
place. Replacing Putnam was PIMCO Funds with $138.2
billion, FRC reported.

The FRC figures differ from Putnam’s own numbers as
reported in regulatory filings. Putnam reported that at the
end of November, it had $158 billion in assets in long-term
mutual funds, plus another $6 billion in short-term or
money market funds.

But even Putnam’s own data reflect a torrent of assets
headed for the exits after the company was hit with charges
that it committed fraud by allowing money managers to
market time funds they supervised.

By Putnam’s own reckoning, the company’s mutual fund
assets under management fell $11 billion in November, and
its institutional assets, such as pension fund money that
isn’t counted by FRC, fell by $21 billion, Putnam said.
Putnam numbers also reflect market appreciation or
depreciation that occurred in November.

Though Putnam continues to see clients withdraw money,
company officials told the Boston Globe that the worst is
now behind them. “We have significant improvement in the
trend related to our fund flows so far in December,
compared to November,” spokeswoman Nancy Fisher told the
Globe.

Putnam wasn’t the only firm caught up in the scandal to
see investors flee with their dollars, according to the
November FRC data:

Strong Capital Management, whose founder and
former chairman, Richard Strong, admitted to improper
trading in company funds (See
Trading Probes
Muscle Out Strong, Putnam Chiefs
), had $1.6 billion in net outflows from company
funds during the month.